What is the association between interest rates and bond prices? a   They move in the same directions. b   They move in opposite directions. c   They sometimes move in the same directions, sometimes in opposite directions. d   They have no relationship with each other (i.e., they are independent)

Typically, short-term interest rates: А. are more volatile than long-term interest rates В. are less volatile than long-term interest rates C. have similar volatility as the long-term interest rates D. None of the above

5. Bond price and interest rates are INVERSELY related. Select one: True False

(I) Because interest rates on Treasury bills are more volatile than rates on long-term securities, the return on short-term Treasury securities is usually above that on longer-term Treasury securities. (II) A Treasury STRIP separates the periodic interest payments from the final principal repayment. A. (I) is true, (II) false. B. (I) is false, (II) true. C. Both are true. D. Both are false.

Can real interest rates be negative ?  Give a simple example

Bond prices and bond yields are negatively related. Explain why

1. Bonds with longer maturities will a. fluctuate less when interest rate change b. fluctuate more when interest rate change c. none of the above

yield to maturity implies a bond price. a. lower; lower b. higher; lower c. higher; higher d. None of the above A.

When the bond prices rise, interest rates fall.  True  FalsE

Which of the follwing statement is correct. As the credit risk of a bond increases: The YTM falls and price of the bond falls The YTM increases and price of the bond falls The YTM falls and price of the bond rises The YTM increases and price of the bond rises unanswered